In an unprecedented move, JAMA published President Obama’s status report on the ACA. In it, the President details the impact of the ACA using charts and data from various sources and offers up some suggestions for what should happen next.
The law was passed with three goals – to provide health insurance to those without it, to bring down the cost of care, and to improve healthcare quality. Progress toward the first goal is well documented: nearly 17 million more people have coverage today as a result of the ACA. That is a clear victory. Less clear, however, is the ACA’s impact on cost, at least in employer-sponsored health plans – which still cover more than half of all Americans with insurance. The report asserts that the ACA has slowed cost growth in in private insurance, but hasn’t resulted in a higher out-of-pocket cost share for those enrolled in employer plans.
That improbable combination raised some eyebrows here at Mercer. The report mentions a few of the more popular ACA mandates – preventive care at no charge, eliminating life-time maximum benefits, and expanding dependent eligibility. Those provisions could only increase cost, while at the same time another ACA provision, the excise tax, was established to penalize health plans that cost too much! The President defended the excise tax in his article, but fact is that it has led employers to shift cost to employees, chiefly with high-deductible health plans. Our data shows that fully one-fourth of all covered employees are now in high-deductible consumer-directed health plans, and even deductibles in traditional PPOs have risen at a faster pace than healthcare cost increases. That’s not surprising, given that three years ago, nearly half of employers were on track to hit the excise track threshold in 2018, the year it was first supposed to go into effect. That number has dropped each year as employers have taken steps (often unwanted, as our recent survey found) to shift cost to employees to lower cost. We’ve maintained from the beginning that the “Cadillac tax” was going to unfairly hit plans that had high cost for reasons other than rich plan design, and were pleased to learn yesterday that more than 300 members of the House of Representatives – nearly 70% – have signed onto legislation to repeal the tax.
I will say that I wished President Obama could have given employers a little more credit! Compliance with the ACA has been a huge effort and expense to employers – new fees, communications requirements, reporting requirements and compliance costs – and in the end, they continue to cover all the same people they have always covered. That’s more than half of all Americans with health insurance.
As for the future of the ACA, so much will be determined by what happens in elections and how lawmakers can work together. Will there be a public option? Will Americans age 50+ be able to buy into Medicare? Will employees be taxed on their employer-sponsored health insurance? Time will tell. In the meantime, employers remain committed to providing healthcare benefits to their employees.